Category Archives: Philip Morris Interntional

Woot! This story made my heart warm. Philip Morris International (a company split off from Altria that focuses specifically on the tobacco market outside of the U.S.) stock dropped 18 percent on April 19, partly because sales of its iQos product — a device that heats a tobacco plug without setting it on fire — has not gone as well as projected.

For the year, PMI stock has dropped 4 percent.

PMI is such a huge player in the tobacco market that its drop affected the stocks of all tobacco companies. British American Tobacco PLC and Imperial Brands PLC dropped 5.4 and 2.9 percent respectively while Altria dropped 7.7 percent.

Oh, ouch, I hope people lose their jobs. I hope CEOs lose their bonuses. I can dream, can’t I?

According to MarketWatch, much of this is tied to the iQos and its performance in Japan. From a MarketWatch article:

Philip Morris and its rivals have spent billions of dollars in recent years to research and market tobacco heating and other new products they believe will help lure existing smokers from conventional cigarettes, whose sales are in decline globally. While tobacco companies have so far been able to offset declining volumes with rising prices, that strategy is seen as having limits, and companies are scaling back investments in traditional tobacco operations.

Japan, where Philip Morris launched IQOS in 2016, is closely watched by investors and public-health researchers as a test case for how reduced-risk products could catch on with consumers. Smoking rates in the country have plummeted after IQOS’s introduction — it has captured 16% of the tobacco market — and Philip Morris has pointed to that success as an indication of what could be achieved elsewhere.

But Thursday, the company warned that once-breakneck sales in Japan had cooled.

“Device sales were slower than our ambitious expectations,” Philip Morris Chief Financial Officer Martin King said on a call with investors. Mr. King warned of a maturing market in Japan, saying Philip Morris had run through early adopters quicker than expected and must win over “the more-conservative consumers, especially the age 50-plus smoker segment which represents approximately 40% of the total adult smoker population.”

I would love to see all these companies go belly-up. I know it won’t happen overnight, but it’s a good sign that the end of Big Tobacco could be in sight.

The Supreme Court, which heard petitions brought forward by tobacco-control activists, stayed the Karnataka court’s order on Monday, citing the need to protect the health of citizens.

“Health of a citizen has primacy and he or she should be aware of that which can affect or deteriorate the condition of health,” the Supreme Court said in its 13-page order.

“Deterioration may be a milder word and, therefore, in all possibility the expression ‘destruction of health’ is apposite.”

The court’s decision comes as a relief for health advocates and federal health ministry who say bigger health warnings deter tobacco consumption. More than 900,000 people die each year in India due to tobacco-related illnesses, the government estimates.

I liked this part of the story most:

The court’s decision is a blow to cigarette makers such as India’s ITC Ltd and Philip Morris International Inc’s Indian partner, Godfrey Phillips India Ltd, whose representatives call the rules extreme. In protest at the health warning measures, the industry briefly shut its factories across the country in 2016 and filed dozens of legal cases.

Awwww, poor babies. Nothing warms the cockles of my heart more than the thought of tobacco executives POUTING. Especially Philip Morris International. They have been aggressively fighting warning labels on cigarettes worldwide.

Cigarette pack in India with new warnings.

This is not the end of the case. The Supreme Court essentially just stayed the lower court’s decision. The case will continue to be heard by the courts in March.

However, it appears some tobacco companies in India are already complying with the Supreme Court decision and are putting the 85 percent warnings on their cigarette packs.

Philip Morris International this week made the somewhat shocking announcement that it plans to abandon tobacco altogether as its “New Year’s Resolution” and will focus on “electronic alternatives,” (Apparently, that means e-cigarettes).

This pronouncement raised some serious eyebrows … and skepticism. PMI (a separate entity from Altria, which owns tobacco brands in the U.S.) is a huge player on the worldwide tobacco market. PMI went so far as to create a website: smokefreefuture.co.uk where people can get information on quitting smoking. And by the way, you can only click on that link if you live outside the U.S. I guess they don’t want to help Americans quit smoking.

Sounds all well and good, right? Well, noooot so fast.

First of all, PMI, the company that sold its customers the disease, is now selling them the cure — e-cigarettes. And in its “we’re quitting tobacco” campaign, the company is pushing its e-cigarette products. So, this appears to be an attempt at simply promoting its e-cigarette brands.

Secondly, if PMI is getting out of the tobacco business, why is the company still fighting plain packaging laws and other restrictions on tobacco marketing worldwide.

The Truth Initiative argues that if it were seriously anti-smoking now, PMI would cease sales and production of cigarettes altogether, but evidence suggests that the company may not be in such a hurry to make that happen.

Beginning in July, Reuters published a series of PMI documents that reveal the company’s correspondences and meetings with delegates from various countries, in secret efforts to undermine the World Health Organization’s global anti-smoking Framework Convention on Tobacco Control (FCTC).

Thirdly, there appears to be zero timetable for dropping out of the tobacco business. As Truth Initiative points out, last year, PMI sold 565.5 billion cigarettes. They aren’t getting out anytime soon.

It is the height of hypocrisy for PMI to proclaim that it is helping solve the tobacco problem while it aggressively markets cigarettes—especially in low- and middle-income countries—and fights proven policies to reduce tobacco use and save lives. This advertising campaign should be seen for what it is: an effort to divert attention from the fact that PMI remains a primary cause of the smoking problem, not the solution.

Not surprisingly, PMI set no deadline for actually giving up cigarettes. If the company is truly committed to a smoke-free future, it should actively support the proven policies to reduce smoking that are endorsed by an international public health treaty, the World Health Organization Framework Convention on Tobacco Control. These include significant tobacco tax increases, comprehensive smoke-free laws, tobacco advertising bans, and graphic health warnings on cigarette packs. These policies apply equally to all tobacco companies, and supporting them would not put PMI at a competitive disadvantage.

Instead, the company has led the fight against these policies around the world. A 2017 investigative report by Reuters revealed a massive, secret PMI campaign aimed at “bringing to heel the world’s tobacco control treaty.” From Australia to Uruguay to Thailand, the corporation has filed expensive lawsuits that challenge strong tobacco control laws and seek to intimidate other countries into inaction.

PMI’s latest claims are no more credible. Until the company stops marketing cigarettes and fighting efforts to reduce smoking, its claimed commitment to a smoke-free future should be seen as another public relations stunt, not a serious effort to reduce the death and disease caused by its products.

So, it certainly seems PMI is simply blowing smoke. And not really fooling very many people, either.

Oh, this is too rich. Philip Morris International, the international wing of Altria, has proposed setting up something called “A Foundation for a Smokefree World.”

The World Health Organization has urged world governments not to get involved with the foundation, pointing out the pretty glaring conflict of interest.

Here’s the kicker, Philip Morris Int’l plans to fund its foundation with $80 million over 12 years. Wow, that’s big of them. A multibillion corporation that has been fighting anti-tobacco intiatives worldwide for 10 years that will rake in billions in profits setting aside $80 million over 12 years for good public relations.

conflict of interest between the tobacco industry and public health.” (1) WHO Member States have stated that “WHO does not engage with the tobacco industry or non-State actors that work to further the interests of the tobacco industry”, (2) the Organization will therefore not engage with this new Foundation.

Article 5.3 of the WHO Framework Convention on Tobacco Control (WHO FCTC) obliges Parties to act to protect public health policies from commercial and other vested interests of the tobacco industry in accordance with national law. Guidelines for implementation of Article 5.3 state clearly that governments should limit interactions with the tobacco industry and avoid partnership. These Guidelines are also explicit that Governments should not accept financial or other contributions from the tobacco industry or those working to further its interests, such as this Foundation.

Strengthening implementation of the WHO FCTC for all tobacco products remains the most effective approach to tobacco control. Policies such as tobacco taxes, graphic warning labels, comprehensive bans on advertising, promotion and sponsorship, and offering help to quit tobacco use have been proven to reduce demand for tobacco products. These policies focus not just on helping existing users to quit, but on preventing initiation.

(Here’s the kicker:)

If PMI were truly committed to a smoke-free world, the company would support these policies. Instead, PMI opposes them. PMI engages in large scale lobbying and prolonged and expensive litigation against evidence-based tobacco control policies such as those found in the WHO FCTC and WHO’s MPOWER tobacco control, which assists in implementation of the WHO FCTC. For example, just last year PMI lost a six year investment treaty arbitration with Uruguay, in which the company spent approximately US$ 24 million to oppose large graphic health warnings and a ban on misleading packaging in a country with fewer than four million inhabitants.

There are many unanswered questions about tobacco harm reduction (3), but the research needed to answer these questions should not be funded by tobacco companies. The tobacco industry and its front groups have misled the public about the risks associated with other tobacco products. This includes promoting so-called light and mild tobacco products as an alternative to quitting, while being fully aware that those products were not less harmful to health. Such misleading conduct continues today with companies, including PMI, marketing tobacco products in ways that misleadingly suggest that some tobacco products are less harmful than others.

This decades-long history means that research and advocacy funded by tobacco companies and their front groups cannot be accepted at face value. When it comes to the Foundation for a Smoke-Free World, there are a number of clear conflicts of interest involved with a tobacco company funding a purported health foundation, particularly if it promotes sale of tobacco and other products found in that company’s brand portfolio. WHO will not partner with the Foundation. Governments should not partner with the Foundation and the public health community should follow this lead.

I love WHO calling this Foundation a “front group” because that’s sure what it sounds like. Philip Morris International has fought and fought and fought tobacco regulations around the world, including plain packaging laws and limits on tobacco marketing. And now it wants to convince people its one of the good guys?

The president of the foundation responded, but I remain pretty unconvinced.

The foundation’s founder and president-designate, Derek Yach, a former senior official at the WHO, said more collaboration, not less, was needed to win the war on smoking.

“I am deeply disappointed, therefore, by WHO’s complete mischaracterisation of the nature, structure and intent of the Foundation in its recent statements – and especially by its admonition to others not to work together.”

I find this a pitifually empty statement Collaboration? Really? With the industry that has been fighting regulations tooth and nail? If this foundation was legit, why not find sources of funding other than the tobacco industry? Then, I might give it some benefit of the doubt (though to be honest, it would be really easy for the industry to fund the foundation through dummy organizations.)

What Derek Yach needs to be reminded of is that Big Tobacco did something very similar 60 years ago, it was called the Tobacco Institute and the Council for Tobacco Research. It was established as a PR move to try and convince the public that the industry was “concerned” about the “possible” health effects of smoking. Instead, the institute was used for decades to deflect, distract and obfuscate the facts about smoking. These organizations were disbanded by the 1998 Master Settlement Agreement, but it appears PMI is trying to start up something that sounds absolutely similar.

Interesting read here for my Indian readers on how India is threatening to crack down against Philip Morris International with some kind of “punitive action” for violating that country’s anti-tobacco laws prohibiting marketing cigarettes to minors.

The Indian Healthy Ministry sent a warning letter to PMI after a Reuters investigation this summer dug up secret memos from the company about how to market cigarettes to young adults, including using conveniently located advertising kiosks and through promotional giveaways. Reuters is making a big deal out of this and has even set up a website where you can peruse reams of Philip Morris International internal documents.

That investigation also found that PMI has a deeply entrenched strategy of trying to undermine what’s known as the Framework for Tobacco Control, a multi-nation treaty to try and curb tobacco’s influence in the developing world. That’s a whole another imbroglio I need to look into.

… Indian government officials say Philip Morris is using methods that flout the nation’s tobacco-control regulations. These include tobacco shop displays as well as the free distribution of Marlboro – the world’s best-selling cigarette brand – at nightclubs and bars frequented by young people.

In internal documents, Philip Morris International is explicit about targeting the country’s youth. A key goal is “winning the hearts and minds of LA-24,” those between legal age, 18, and 24, according to one slide in a 2015 commercial review presentation.

As with the point-of-sale ads at kiosks, public health officials say that giving away cigarettes is a violation of India’s Cigarettes and Other Tobacco Products Act and its accompanying rules.

Philip Morris’ marketing strategy for India, which relies heavily on kiosk advertising and social events, is laid out in hundreds of pages of internal documents reviewed by Reuters that cover the period from 2009 to 2016. In them, Philip Morris presents these promotions as key marketing activities. In recent years, they have helped to more than quadruple Marlboro’s market share in India, where the company is battling to expand its reach in the face of an entrenched local giant. Reuters is publishing a selection of those documents in a searchable repository, The Philip Morris Files.

The company’s goal is to make sure that “every adult Indian smoker should be able to buy Marlboro within walking distance,” according to another 2015 strategy document.

PMI has been told repeatedly to remove the outside advertising at these kiosks, but enforcement in India is weak. The giveaways take place at social events with women dressed colourfully in the brand colours of different kinds of Marlboros.

Pretty sleazy huh? PMI is clearly looking for every tiny little loophole in the laws it can find, it appears.

India is a HUGELY important market for Big Tobacco, because smoking rates in the West are in steep decline, while China strictly controls tobacco sales as a state enterprise. That leaves … ta da! … India with its 1.3 billion people as the biggest available new market in the world (along with the Philippines and Indonesia). Big Tobacco is literally drooling over these markets, and the Indian government has a big fight on their hands to keep PMI and other international companies at bay.

Speaking of tobacco and emerging markets: The tobacco industry has poured a ton of its resources into Indonesia. This nation of 250 million people has one of the highest smoking rates in the world at about 40 percent (70 million-plus smokers, compared to about 40-45 million smokers in the U.S.).

And there are few if any restrictions on smoking, smoking advertising or packaging. In fact, you will find cigarette advertising literally right outside of schools in Indonesia.

Emerging markets — really big emerging markets like Indonesia, the Philippines, India and pretty much all of South America and Africa — are the international tobacco industry’s solution to remaining a financial juggernaut despite the plummeting smoking rate and stricter laws regulating tobacco in the West. In fact, Indonesia is on track with its lack of any semblance of regulation and its huge population to become the biggest tobacco market in the world.

The end result is a looming public health disaster. According to the World Health Organisation (WHO), Indonesia has one of the highest male smoking rates in the world at 67% – and the number of women lighting up is rising fast as well, partly due to role models such as the popular, chain-smoking fisheries minister Susi Pudjiastuti breaking down gender norms. The impacts are already huge, with the WHO estimating that smoking claims about 425,000 Indonesian lives each year – nearly a quarter of the country’s annual deaths. Some media outlets have even begun referring to the country as ‘Tobaccoland’.

“These tactics are used by international giants like Philip Morris and Indonesian brands alike because tobacco companies rely on luring in youth to replace those who die or quit smoking,” he says. “It’s part of their deadly playbook.”

A survey conducted in 2016 found 85% of schools surveyed in five Indonesian cities were surrounded by tobacco advertisements. And according to Purnomo from the smokers’ rights group, their campaigns appear to be working.

Experts say the tobacco companies’ corporate social responsibility programs are merely a strategy to further entrench their products into society and do little social good. “Through their CSR activities, the Indonesian tobacco companies have precisely ignored the negative impacts of tobacco,” said a recent report from the Online Journal of Health Ethics.

It is tobacco’s entrenched status in Indonesian society that makes fighting tobacco so difficult for campaigners, who are often labelled agents of US pharma giants trying to bring down Indonesia’s sovereignty.

… Philip Morris International remains confident about Indonesia. The company’s 2016 investor day presentation (pdf) said Indonesia shows “favourable market demographics over the long term.” Another slide was titled, “Indonesia: Positives results from recent new launches.”

It seems the tobacco industry is counting on Jakartans like 19-year-old Ayu(who like many Indonesians goes by one name), who says she is too addicted to quit and will continue to smoke despite the harms.

“My friends all smoke, my colleagues all smoke. The whole damn city smokes,” she says. “How am I ever going to quit?”

Philip Morris International’s earnings and revenue are dropping, dropping faster than forecast by the company.

Philip Morris is a spin-off from Altria, which handles Philip Morris’ domestic production of cigarettes.

According to several stories I came across, Philip Morris’ revenues dropped 11 percent at the end of 2015, dropping faster than projected. Cigarette shipping volume also dropped 2.4 percent, excluding acquisitions.

What this tells me, surprisingly, is that even internationally, the tobacco industry is hurting. Now, by “hurting,” I mean, they aren’t raking in the kinds of billions there were raking in 20 and 30 years ago. The biggest declines were in Eastern Europe, the Middle East and Africa, where revenues were down 19 percent — that is interesting.

International tobacco company Philip Morris International has been an attractive stock ever since it split off from domestic peer and former parent Altria Group , combining growth prospects from foreign markets with solid dividend income. But 2015 has been a tough year for Philip Morris, and between foreign currency weakness and new regulatory threats that, in some cases, are even worse than what Altria has had to face in the U.S., the global tobacco giant has seen its financials under pressure. Coming into Philip Morris International’s fourth-quarter financial report Thursday, investors were prepared for declining fundamentals, but worse-than-expected results and gloomy guidance went beyond those initial expectations.

There’s the important sentence: “new regulatory threats that, in some cases, are even worse than what Altria has had to face in the U.S.” What this is referring to are small countries around the world attempting to pass restrictions on marketing and packaging of tobacco. Philip Morris International has been in a massive legal battle for years with Australia over that country’s plain packaging laws, and they’re battling a bunch of other countries like Uruguay and New Zealand over marketing and plain packaging laws.

John Oliver’s “Jeff the Diseased Lung” was a giant “screw you” to Philip Morris International for its tactics bullying small countries around the world.

And here we go … I’ve talked about this extensively, that the tobacco industry absolutely is looking to take over the e-cig industry. From this Investor’s Business Daily article:

“We continued to make exciting progress on the development, assessment and commercialization of our Reduced-Risk Products,” he said. “We significantly expanded the roll-out of iQOS (smokeless cigarette) in Japan and introduced it into several new markets.”

Yup, they’re absolutely going to be looking for e-cigs to help save their skins.

Anyway, I thought this was great news. Big Tobacco is slowly shrinking, not fast enough for my taste, but make no mistake, an 11 percent drop in revenue is a real hurt. I look for Big Tobacco to respond by diversifying more into e-cigs and possibly one day, marijuana.

Specifically, Australia defeated Philip Morris International, which has been one of the corporations fighting Australia for the past five to 10 years over that nation’s plain-packaging laws.

Initially, the government of Australia won in the Australian Supreme Court for the right to impose a plain-packaging law. In Australia, packages of cigarettes not only cannot have logos of tobacco brands, but they are required to have graphic images of the damage that tobacco does to people’s mouths, teeth, etc.

Australian plain packaging. Pleasant, huh?

Anyway, after losing before the Australian Supreme Court, Philip Morris Int’l persuaded several countries to get involved in litigation against Australia to claim that that country’s plain packaging laws were violating trade agreements and international trade law. Ukraine was one of the countries involved, but dropped out many months ago.

However, Hong Kong was still involved in this legal action, invoking something called the “1993 Investment Promotion and Protection Agreement”. An entity known as an “arbitral tribunal” (seriously, that’s what it is called), declined to hear Hong Kong and Philip Morris Int’l’s case, ending the litigation … for now.

From the Guardian article:

The minister responsible for Australia’s tobacco policy, Fiona Nash, said: “We welcome the unanimous decision by the tribunal agreeing with Australia’s position that it has no jurisdiction to hear Philip Morris’s claim.”

The Public Health Association of Australia welcomed the decision as “the best Christmas present for public health nationally and internationally”.

“Smoking in Australia is falling in adults, in children and by tobacco volume sales,” said the association’s chief executive, Michael Moore.

“Now the tobacco companies have lost another crucial legal bid to stop this life-saving measure. The message is loud and clear – plain packaging works, and it is here to stay.”

Not surprisingly, Philip Morris was not happy with the decision. From the article:

“There is nothing in today’s outcome that addresses, let alone validates, plain packaging in Australia or anywhere else,” said Marc Firestone, Philip Morris International senior vice president and general counsel.

“It is regrettable that the outcome hinged entirely on a procedural issue that Australia chose to advocate instead of confronting head on the merits of whether plain packaging is legal or even works.”

This decision could help other countries that are proposing plain packaging laws. Ireland already does it, and France is moving ahead with plain packaging for tobacco in 2016, following Australia’s lead. Efforts to force plain packaging for cigarettes in the U.S. are stymied by a very strong First Amendment.

Philip Morris International and other tobacco companies have fought these plain packaging laws around the world; they’ve even enlisted the help of the U.S. Chamber of Commerce to aid them in their fights against Uruguay, Ireland, New Zealand, Australia, Togo and other countries. Notice most of these countries are fairly small with limited finances and resources to fight Big Tobacco. Not a coincidence.